Suppose you are the manager of a chain of fitness centres. You have just learned that the Government has passed a new law to furth

I'm working on a economics exercise and need an explanation and answer to help me learn.

  • Suppose you are the manager of a chain of fitness centres. You have just learned that the Government has passed a new law to further enhance healthy lifestyle among the youths. The legislation provides increased subsidies gym operators, as well as tax breaks for parents who spend up till RM1,000 on their children’s gym membership fees. As a result of this legislation, what do you predict will happen to the equilibrium price and quantity of gym membership? Why?
  • Assume your marginal rate of substitution is five roti johns for two ayam guntings at the present bundle of roti johns and ayam guntings that you are consuming. If the price of a roti john is RM5.00 and the piece of a ayam gunting is RM8.00, are you maximizing your utility at this level? If not, how should you change your consumption?
  • Suppose you are the CEO of a firm that manufactures surgical equipment. You have a production plant in Petaling Jaya where you employ highly skilled labor. Your firm is considering moving its production facilities from Petaling Jaya to Ho Chi Minh City in Vietnam in an attempt to lower labor costs. When you compare wages in Vietnam and in Malaysia, you notice that the average wage in Vietnam is significantly lower than the average Malaysian wage. What factors other than wages should you consider when you decide whether or not to move production to Vietnam? Explain.

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